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December 14, 2012

Morningstar Announces Fund Manager of the Year Nominees

No glitz and glamour, just prestige and in-flows for Morningstar's annual award winners

It might not have the cache of an envelope from Price WaterhouseCoopers or the glamour of Kim Kardashian, but Morningstar is in the midst of its mutual fund nominee announcements for the 2012 Managers of the Year.

The Chicago-based research firm announced its Domestic-Stock Fund hopefuls on Thursday and the International-Stock Fund category on Friday. Morningstar will name its fixed-income nominees on Dec. 17, the alternatives nominees Dec. 18, and allocation nominees on Dec. 19. The winners will be announced in the first week of January.

In announcing the Domestic-Stock category, the firm said, “Each year we recognize a standout mutual fund manager of the year for domestic stocks, international stocks, and fixed income, and this year, we’re recognizing a standout allocation and alternatives fund manager as well.

“We're seeking to acknowledge managers who have produced great long-term results for investors and who have been great stewards of investors’ capital, as well as those who have had an exceptional calendar year,” it added in explaining the selection process.

2012 Domestic-Stock Fund Nominees:

• American Funds New Economy Team (ANEFX) - The fact that the average manager tenure is 14 years has something to do with its strong performance, Morningstar said in its announcement.

• Timothy Hartch and Michael Keller, BBH Core Select (BBTEX) - This large-blend fund is far from a household name, but it is "distinctive", according to Morningstar senior fund analyst George Carlson.

"Managers Timothy Hartch and Michael Keller set this fund apart in several ways," Carlson writes. "They run a concentrated portfolio of roughly 30 stocks, ignore the sector and individual stock weightings of the fund’s S&P 500 benchmark, and focus heavily on downside protection."

"Although he willingly pays up for rapid growers and will invest heavily at times in risky biotech firms, Wymer has lasted 16 years at this fund by exhibiting patience and conviction," Carslon adds.

• Bill Frels, Mark Henneman, and Team from Mairs & Power Growth (MPGFX)-While Fidelity’s Steve Wymer is willing to stay put in stocks for a while, Carlson says Frels and Henneman are "positively tortoiselike."

"Of the fund’s top 25 holdings (which comprise most of its assets), 18 were bought in the 1990s and only one hasn’t been held for at least 10 years."

• Bill Nygren, Oakmark (OAKMX) and Oakmark Select (OAKLX)-Rounding out the category, Carslon concludes that Nygren is an "accomplished value investor, and in 2012 he’s demonstrated he has a broader definition of value than most of his peers.

"Both of his charges now sport healthy weightings in the growth side of the Morningstar Style Box and bigger stakes in tech firms than their typical large-blend peer."

"The fund's annual turnover rate is typically around 20%. He's willing to buy plenty of small- and mid-cap companies along with the big ones, and that flexibility has helped the fund over the years," Wolper writes.

• Rajiv Jain, Virtus Foreign Opportunities (JVIAX) and Virtus Emerging Markets Opp. (HEMZK)-Jain, who Wolper notes works for subadvisor Vontobel Asset Management, is an unconventional manager whose portfolios don't look much like those of indexes or his peers.

Although he favors growth companies, and his funds' portfolios lie deep in the large-growth corner of the Morningstar Style Box, he tries to take a careful approach to this strategy," Wolper explains. "He wants steady growers with dominant positions in their fields rather than the most rapid growers, for example. He also wants to see straightforward, understandable business plans."

• David Samra and Daniel O'Keefe, Artisan International Value (ARTKX), Artisan Global Value (ARTGX)-Artisan has to be happy. Wolper writes, "This duo won Morningstar's International-Stock Fund Manager of the Year award for 2008, when their cautious value approach held these funds' losses far below those of all but a few rivals."

• Mark Yockey, Artisan International (ARTIX) and Artisan International Small Cap (ARTJX)-In Artisan's second appearance, Wolper concludes that "Yockey is another prior winner of the International-Stock Fund Manager of the Year award, having won it in what seems like another era: 1998. Unlike Samra and O'Keefe--whose operation is completely separate--he uses a growth-oriented approach. So it's not surprising that he won this award in the late 1990s when growth was king."